Accounting bodies have called for listed companies to improve reporting on the UN’s Sustainable Development Goals (SDG) in an attempt to meet 2030 environmental goals
The UN-developed Sustainable Development Goals (SDGs) cover 17 areas and although they are not mandatory they do provide a framework for reporting critical global issues such as tackling climate change, guaranteeing decent work and protecting biodiversity on land and in the oceans.
The latest report from the UN focuses on Sustainable Development Goals Disclosure (SDGD) with a series of recommendations on how companies report governance, strategy, management approach, and performance in relation to achieving the 2030 Sustainable Development Goals.
They offer an approach for businesses to address sustainable development issues aligned to the three main reporting frameworks - the Global Reporting Initiative (GRI 101 Foundation Standard), the International <IR> (Integrated Reporting) Framework and the Task Force on Climate-related Financial Disclosures (TCFD 2017).
The SDGD report stated: ‘However, any one of these frameworks/standards alone is insufficient to report on an organisation’s approach to considering both risks and opportunities resulting from sustainable development issues, the implications for value creation (and value destruction) and the implications for and impact on achievement of the SDGs.’
The recommendations attempt to establish best practice for corporate reporting on the SDGs and enable more effective and standardised reporting and transparency on climate change, social and other environmental impacts.
Companies are failing to produce detailed environmental disclosures despite pressure from shareholders and the public.
Elizabeth Boggs-Davidsen, director at the United Nations Development Programme (UNDP) said: ‘To achieve the SDGs companies and investors will need to move away from mapping existing activities to the goals to a more integrated practice of directing and disclosing on investment activities that create more impact and contribute to progress towards the SDGs.’
The report said: ‘The shift will only be achieved by involving the accounting/finance, sustainability and strategy functions. Corporate reporting frameworks that require Board engagement lead to change.
‘By involving the accounting/finance, sustainability and strategy functions of an organisation and requiring Board engagement, it is hoped that the SDGD Recommendations will facilitate a shift in organisations’ business models and investment decisions.’
This will require relevant and material disclosures about the factors that influence long term value creation (or destruction) for the organisation and society or that have a positive or negative impact on the achievement of the SDGs in the annual report.
The SDGD recommendations focus on:
- governance - the board’s integration of sustainable development issues into overall governance processes;
- strategy – how the consideration of sustainable development issues has influenced strategy and its impact on the achievement of the SDGs;
- management approach - how it has integrated consideration of sustainable development issues; and
- performance and targets - the connection between the organisation’s approach to sustainable development and its vision and mission.
Kevin Dancey, CEO at International Federation of Accountants (IFAC), said: ‘Achieving the SDGs requires dedication from business, and the urgency continues to grow.
‘We fully support global best practices that enable effective, transparent reporting on sustainability measures. It is imperative that we act together and that we act now to secure a sustainable future.’
Global companies that currently align their reporting to SDG include Carlsberg, Philips and Vodafone.
The SDGD Recommendations were developed after consultation with accounting and finance professionals, sustainability experts, academics, consultants, standard setters, asset owners and managers.